The Indian mutual fund industry experienced a significant decline in inflows to hybrid mutual funds during the 2024-25 fiscal year, primarily due to market turbulence in the second half of the fiscal. However, despite this decline, the category has shown remarkable resilience, with a significant increase in the number of investors and assets under management compared to the previous fiscal year.
Key Factors Contributing to Resilience
- Drawdown protection provided by the debt component of hybrid schemes
- Typically experience lower drawdowns compared to equity funds
“The drawdown protection offered by the debt component of hybrid schemes is a key reason, as it allows investors to stay invested without the stress that comes with pure equity volatility. The NAVs (net asset valued) of hybrid funds typically experience lower drawdowns compared to equity funds, making them a preferred choice for investors seeking a more stable journey,” Trivesh D, COO of Tradejini, said.
Increasing Investor Base
The number of investors in hybrid mutual funds has increased significantly, with 1.56 crore folios as of March 2025, compared to 1.35 crore a year earlier. This represents an addition of over 33 lakh investors.
| Assets Under Management (AUM) | ₹8.83 lakh crore | ₹7.23 lakh crore | 22% growth |
This growth in the number of investors is a testament to the increasing popularity of hybrid funds.
Growth in Assets Under Management
The assets under management of hybrid mutual funds have increased significantly, reaching ₹8.83 lakh crore as of March 2025, a growth of 22% compared to the previous fiscal year.
- NFOs (New Fund Offers) in FY24 were 21, while in FY25, they declined to 12.
- Net inflows in FY25 were ₹1.19 lakh crore, compared to ₹1.45 lakh crore in FY24.
This growth in assets under management is a significant increase, reflecting the increasing popularity of hybrid funds.
Investor Preferences
Hybrid funds are preferred by investors with a moderate or low-risk profile. These funds offer a balance between the volatility associated with equity markets and the stability provided by fixed-income markets.
“The hybrid fund is a great option for investors who want to participate in the equity market without the stress of volatility. The drawdown protection offered by the debt component of hybrid schemes is a key reason for this preference,” said Trivesh D, COO of Tradejini.
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